Attention Pennsylvania businesses: The state this week raised the threshold for determining whether employees are eligible for overtime pay.
The threshold is scheduled to continue to rise automatically in October 2021 and 2022 and every three years after that.
Pennsylvania’s New Rules
The U.S. Department of Labor modified its overtime pay requirements under the Fair Labor Standards Act effective January 1, 2020. Pennsylvania is now going beyond the recent federal changes, and determined the below overtime thresholds for overtime eligibility to increase in three steps:
- $684 per week, $35,568 annually (the federal threshold) on October 3, 2020;
- $780 per week, $40,560 annually on October 3, 2021; and
- $875 per week, $45,500 annually on October 3, 2022.
Unless an exemption applies, any Pennsylvania employee whose base earnings fall below the thresholds is entitled to overtime pay. In addition, starting October 3, 2023, the salary threshold will automatically increase every three years.
Pennsylvania's new overtime rules also allow up to 10 percent of the salary threshold to be satisfied by nondiscretionary bonuses, incentives, and commissions that are paid annually, quarterly or more frequently.
Employees Eligible for Overtime
- With a few exceptions, all hourly employees who work more than 40 hours per week
- Most salaried employees who work more than 40 hours per week and earn less than the salary threshold regardless of their job duties
- Most salaried employees who do NOT perform executive, administrative, or professional duties, regardless of how much they are paid
Employees Not Eligible for Overtime
- Salaried employees who perform executive, administrative, or professional duties and make more than the salary threshold per year
- Other occupations exempted by the Minimum Wage Act
The Pennsylvania Minimum Wage Act Exemption requires employers to pay their employees at a rate of not less than $7.25 an hour for all hours worked and an overtime rate of 1.5 times the employee's regular rate of pay for all hours worked above 40 in a workweek.
However, the Minimum Wage Act provides an exemption from both minimum wage and overtime pay for employees employed in a bona fide executive, administrative, or professional capacity. To qualify for the exemption, employees must meet certain tests regarding their salary and their job duties.
The Pennsylvania Department of Labor & Industry notified businesses operating in Pennsylvania of the new overtime rule. More information can be found on L&I's website at www.dli.pa.gov